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1 July 2018 to 30 June 2019 OLD MUTUAL SUPERFUND PENSION AND PROVIDENT FUNDS INTEGRATED ANNUAL REPORT CORPORATE DO GREAT THINGS EVERY DAY 1
The journey to, and through, retirement is one of the most important that anybody makes. Old Mutual SuperFund understands the importance and value of having a partner that can be relied on to share this journey. That’s why we are committed to walking alongside our fund members throughout their journey. We help them achieve the outcomes they need along the way, and make sure that their chances of a financially secure retirement are optimised. We commit to undertaking this journey with each of our members, because we genuinely CARE about them and their futures. And we recognise the importance of a solid and reliable foundation of CONSISTENCY on which they can build their retirement dreams. That’s why we have a 100% COMMITMENT to putting them, and their needs, first. In doing that, we enable them to achieve the retirement success they desire and deserve. These three Old Mutual SuperFund attributes of CARE, CONSISTENCY and COMMITMENT are the cornerstones on which our members build the futures they want. Our dedication to the principles of good governance, regulatory compliance, responsible investment, and values-driven service are the cement that hold their retirement dreams together. This 2018/19 Annual Report not only details the performance of Old Mutual SuperFund for the year in review; it also highlights our passion for making these “three Cs” of retirement partnership and success a reality in the lives of all of our fund members. DISCLAIMER: The Management Board has taken due care to ensure the accuracy and completeness of this report. However, Old Mutual SuperFund and its officers, editors, compilers, contractors and reporters take no responsibility for any loss or damage that may be sustained as a result of any reliance on the information contained in this report, including, but not limited to information contained in any link or reference it contains. 02
Old Mutual SuperFund is an umbrella retirement fund made up of pension- and provident fund offerings, as well as preservation solutions. Unless stated otherwise, the use of the term Old Mutual SuperFund (the Fund) in this report refers to both the Old Mutual SuperFund Pension Fund and the Old Mutual SuperFund Provident Fund. 03
ANNUAL REPORT ABOUT THIS OFFICER’S REVIEW CHAIRMAN/PRINCIPAL 2018/ 19 HIGHLIGHTS AND ACHIEVEMENTS 06 ABOUT THIS INTEGRATED ANNUAL REPORT 08 Statement of the Management Board 09 Overview of the Integrated Annual Report 09 2. CHAIRMAN AND PRINCIPAL OFFICER’S REVIEW 12 SUPERFUND PROFILE OLD MUTUAL Message from the Chairman 13 Message from the Principal Officer 16 3. OLD MUTUAL SUPERFUND PROFILE 18 About Old Mutual SuperFund 20 Stakeholder Engagement 22 Case Study 1: Retirement Savings Insights 24 THE YEAR IN REVIEW 4. THE YEAR IN REVIEW 26 Performance Metrics 27 Annual Review of Investments 29 Case Study 2: A Holistic Investment Assessment Process 32 Transformation and B-BBEE 34 Responsible investing 35 Member support and education 36 Case Study 3: Going beyond compliance to add value to members 38 GOVERNANCE 5. GOVERNANCE 40 The Management Board 41 Composition of the Management Board 41 Management Board Roles and Responsibilities 42 Board Member Remuneration 43 The Principal Officer 43 FINANCIAL REPORTS Sub-committees 43 Meeting Procedures 44 Code of Conduct 44 Risk Management and Compliance 45 Ethics Standards 45 Case Study 4: There’s more to value than price 46 INVESTMENT PROVIDERS Administration & Technology 48 6. FINANCIAL REPORTS 50 Auditor’s Report 51 Statement of Responsibility by the Principal Officer for the year ended 30 June 2019 52 Summary of the Actuarial Valuation Reports 57 Professional Service Providers 58 7. INVESTMENT PROVIDERS 59 DETAILS ADMINISTRATION 8. ADMINISTRATION DETAILS 60 05
HIGHLIGHTS 2018/19 R5 BN R7 BN IN PENSION FUND IN PROVIDENT FUND CONTRIBUTIONS CONTRIBUTIONS R55 BN R57 BN R12 BN IN PENSION FUND IN PROVIDENT ASSETS FUND ASSETS IN CONTRIBUTIONS TO THE FUND R112 BN R12 BN IN TOTAL ASSETS UNDER IN CLAIMS PAID MANAGEMENT FUND GROWTH 456 715 R3 BN TOTAL ASSETS MEMBERS AS AT IN OLD MUTUAL 30 JUNE 2019 SUPERFUND PRESERVER 5 787 R1 BN PARTICIPATING TOTAL ASSETS 32 349 IN DEFERRED OLD MUTUAL EMPLOYERS 338 RETIREMENT OPTION SUPERFUND PRESERVER MEMBERS AS AT 30 JUNE 2019 DEFERRED RETIREMENT MEMBERS AS AT 30 JUNE 2019 06
ACHIEVEMENTS 2018/19 MEMBER EXPERIENCE AND SUPPORT LAUNCHED RETIREMENT BENEFIT COUNSELLOR (RBC) INITIATIVE Members have free access to a professional RBC to provide the information needed to make appropriate at-retirement investment decisions. ROBOTICS IMPLEMENTED FOR SIMPLE QUERIES Robotic capabilities were piloted to provide more efficient and faster responses to intermediary and member queries. ONGOING SERVICE ENHANCEMENT The Fund continues to delight its members, employers and intermediaries with its commitment to service excellence. In the 2018/19 financial year, highlights included: • Improvement in claims turnaround times • Updates and enhancements to the Member Web • New Broker Web launched with easier access and more functionality COMMITTED TO MEMBER COMMUNICATION The Fund continues to expand and enhance its member communication and engagement network. Member Education newsflashes are provided in multiple languages and member communication takes place via numerous channels in line with individual member preferences. These include letters, texts, e-mails, telephone, face-to-face, real-time on the web, social media and via the Old Mutual Branch Network. GOOD PERFORMANCE FROM DEFAULT INVESTMENT At a time when most balanced investments have been struggling to achieve positive returns, the Old Mutual Absolute Growth Fund delivered 5.2% growth for the 12 months to end-June 2019. GOVERNANCE AND COMPLIANCE COMPLIANCE POSITIVE FSCA REVIEW UNQUALIFIED AUDIT No claims were paid out from the The regulator undertook a full The Fund has now received Fund’s indemnity insurance cover review of the Fund, the results of unqualified audits every year since during the year in review. which were very positive. its inception. This is evidence of its unwavering commitment to good governance. 07
1 ANNUAL REPORT ABOUT THIS ABOUT THIS INTEGRATED ANNUAL REPORT STATEMENT OF THE MANAGEMENT BOARD REPORT OVERVIEW As the body ultimately responsible for ensuring the Old Mutual SuperFund continues on its established course accuracy and integrity of this Annual Report, the towards integrated reporting, but is cognisant of the fact Management Board of Old Mutual SuperFund (the Fund) that this is an ongoing journey rather than a targeted has fully applied its mind to the contents. The Board is of destination. To ensure that this report offers all the Fund’s the opinion that it addresses and fairly represents all the stakeholders a comprehensive view of its performance, material issues relating to the Fund, and its impact on achievements, challenges and plans, the content is aligned its members and other stakeholders. The Board is also to the material issues identified for the Fund. It also details confident that the report is in line with the requirements the governance commitment, strategic objectives, sound of the King IV Report on Good Governance. financial management commitment and fiduciary duties of the Fund to its members and participating employers In reaching these conclusions, the Board has: and stakeholders. • ensured that detailed registers, books and records of the operations of the Fund were kept as required by While the integrated reporting requirements of a Section 7D(a) of the Pension Funds Act; retirement fund are vastly different from those of most commercial organisations, Old Mutual SuperFund makes • considered all the facts and risks that could impact the every effort to report in an integrated way and align the integrity of this report; content of this report with international best practices. • reviewed the Annual Financial Statements and the Particular regard is given to the value delivered by the Fund Auditor’s Report (PwC) to Management; and in response to the priorities identified by its stakeholders and in terms of the six capitals set out by the International • assessed the accounting practices and the effectiveness Integrated Reporting Council. of internal financial controls as required by Section 7D(b) of the Pension Funds Act. On the back of this rigorous assessment and oversight, the Board has unanimously approved this 2018/19 Old Mutual SuperFund Integrated Annual Report. Bertie van Wyk Chairman of the Board 09
REPORT SCOPE AND BOUNDARY This report covers the activities of Old Mutual SuperFund for the financial year 1 July 2018 to 30 June 2019. It details all financial and non-financial matters identified by the Management Board as being material to the performance of the Fund and having a bearing on its ability to deliver on its mandate. The key material issues identified by the Board, in consultation with the Fund’s various stakeholder groups, include (but are not limited to) the following: reliable retirement outcomes and risk sustainable financial and investment protection benefits for members; performance; contributing to the transformation of good governance; investment managers and the broader retirement industry; full regulatory compliance; value creation for all stakeholders; fair treatment of members, participating alignment of the Fund with retirement reforms; employers and other stakeholders; communicating with, and educating, members responsible investment; to improve their financial wellbeing. CAPITALS The International Integrated Reporting Council has identified six capitals as being key requirements for any business or entity to deliver consistent value to its stakeholders. While reporting against these capitals is not a legal requirement, Old Mutual SuperFund recognises that they are vital components in its ability to deliver on the value requirements of its members and other stakeholders. As such, these capitals are integrated into the Fund’s strategic approach, and inform its decisions. In the context of the Fund, the capitals are defined as follows: Financial capital This represents the financial resources available to Old Mutual SuperFund to deliver on its promise of value creation for its members, employers and other stakeholders. The Fund is not only backed by Old Mutual with its vast financial resources, but it also retains its own appropriate reserve levels. Manufactured For Old Mutual SuperFund, this capital refers to the physical infrastructure that enables it to capital create value. This includes the buildings, equipment and infrastructure that enables it to remain a trusted steward and investor of its members’ money. Intellectual capital This is a form of capital at which the Fund excels, thanks to the extensive knowledge, experience and expertise to which it has access, internally, and through its partnerships and external working relationships. Human capital This refers to the competencies, abilities and talent that exist within Old Mutual SuperFund as a result of the people it employs and engages. This is a valuable source of capital for the Fund and its stakeholders. The Fund works continually to attract, up-skill and retain the best people in the retirement industry. Social and This refers to the relationships that exist between the various stakeholders that contribute to, or relationship capital benefit from, the Fund. Old Mutual SuperFund is committed to developing strong relationships with its stakeholders to maximise its ability to optimise members’ retirement outcomes. Natural capital A diverse range of renewable and non-renewable environmental resources enable Old Mutual SuperFund to operate and deliver value. The Fund therefore prioritises the protection of natural capital. It includes Environmental, Social and Governance (ESG) considerations in all its investment appointments. REPORTING PRINCIPLES AND APPROACH This Integrated Annual Report conforms to the recommendations of the Integrated Reporting Framework of the IIRC, the King IV Report on Corporate Governance, the Pension Funds Act, No 24 of 1956 as amended and other relevant South African legislation, including the Companies Act 2008 as amended. 10
ANNUAL REPORT ABOUT THIS LEVELS OF ASSURANCE Old Mutual SuperFund applies an integrated assurance approach comprising three assurance levels. ASSURANCE LEVEL 1: RISK MANAGEMENT The Board applies the specifications set out in its Fund Rules and Sections 7C & D of the Pension Funds Act. Using a comprehensive Fund Risk Log, the board identifies risks that have a potentially negative impact on the Fund or limit its delivery on its mandate and objectives. These risks are then actively managed in line with agreed policies and practices. Where sub-committees are tasked with any aspect of managing or overseeing the Fund, they are mandated to identify any deviations from these policies and practices, and to assess the possibility that such deviations may impact negatively on the Fund or its members. Issues deemed to have a high risk of delivering such negative impacts are reported in the Board Risk Log and mitigating strategies are implemented. The Fund has appropriate provision through fidelity cover, which means that only residual risks are specifically measured, on a qualitative basis, with a 12-month view. ASSURANCE LEVEL 2: EXTERNAL AUDIT The Administration and Financial Reporting Sub-Committee facilitates the external audit process. PricewaterhouseCoopers Inc. (PwC) is the Fund’s external auditor, as approved in terms of Section 9 (3) of the Act. The Management Board reviews the external audit process annually. Based on the findings of the latest review, PwC was re-appointed as external auditor for the 2019/20 financial year. PwC conducts an annual review to verify robustness of the administration system and controls according to the International Standard on Assurance Engagements (ISAE) 3402. ASSURANCE LEVEL 3: GOVERNANCE, RISK AND COMPLIANCE Annual Governance This is the responsibility of the Office of the Principal Officer. The Governance and Risk Review Management Sub-Committee monitors the results of these reviews and reports its findings to the Management Board. Quarterly Old Mutual’s Internal Compliance Office undertakes a quarterly compliance audit of the compliance audit processes highlighted by the Management Board on the Risk and Issues log. The results are reported to the Management Board. Annual valuation There is a statutory requirement to do a valuation every three years. However, as part of its commitment to governance excellence, Old Mutual SuperFund undertakes an annual valuation. This is to confirm that the Fund’s assets are appropriate to its objectives, adequately match the liabilities, and that the investment strategy is suited to the Fund’s membership. All of these requirements were confirmed by the most recent valuation. 11
CHAIRMAN AND PRINCIPAL OFFICER’S REVIEW 12
OFFICER’S REVIEW CHAIRMAN/PRINCIPAL CHAIRMAN’S REVIEW 2 MESSAGE FROM THE CHAIRMAN Bertie van Wyk The main reason why Old Mutual SuperFund exists, is to help its members achieve the retirement outcomes they desire. It’s a responsibility that we take very seriously, and one that we never lose sight of - particularly during times when economic challenges place additional pressure on the lives and finances of our members. Over the past few years, and particularly in the last 12 months, those financial pressures have been felt to an increasing extent by all South Africans, and Old Mutual SuperFund members are no exception. In response, my fellow Board members and I have responded by redoubling our efforts “IN THE TUMULTUOUS and commitment to ensure that, in the tumultuous political POLITICAL AND and investment world that we are experiencing, and where uncertainty reigns supreme, we create as much certainty INVESTMENT WORLD THAT and security as possible for all our members. WE ARE EXPERIENCING, This commitment has been mirrored by our service AND WHERE UNCERTAINTY providers, and the result has been a consistently pleasing performance by SuperFund, across financial and non- REIGNS SUPREME, financial metrics, over the 2018/19 financial year. As a WE CREATE AS MUCH result of challenging investment markets, performance has not been the best ever achieved by the Fund. However, CERTAINTY AND SECURITY compared to our peers and the broader retirement industry, AS POSSIBLE FOR ALL OUR we remain firmly on course and true to our mandate. Most importantly, we remain the trusted retirement fund MEMBERS”. partner our members expect us to be. 13
CONSISTENT INVESTMENT PERFORMANCE The announcement by the ANC, in its 2019 election This adherence to our mandate and member promises manifesto, that it would investigate the introduction was best demonstrated by the performance of Old of prescribed assets for financial institutions caused Mutual SuperFund’s default Absolute Stable Growth understandable concern in retirement fund circles. While Portfolio (AGP). This portfolio not only delivered on its the most obvious fear is that, if implemented, these goal of providing long-term inflation-beating returns, prescriptions would demand that funds invest in failing with consistent downside protection, for investors, but state-owned enterprises, it is much too soon to jump to the it outperformed many of its peers, delivering a pleasing conclusion that this will be the case. return of 5.2% (net of capital charges and gross of investment management fees) for the 12 months to end- Rather, it is likely that such prescription will focus on June 2019. Given that inflation over the same period was investing a portion of the country’s massive retirement approximately 4.5%, this performance by AGP once again investment pool into instruments that target social highlights the effectiveness of its investment strategy, and economic development, like infrastructure, housing, the strength of its investment managers, and its overall education and health. Interestingly, this type of investment suitability as a default retirement investment portfolio. is already a significant requirement of retirement funds, particularly in terms of the latest guidance note that THE IMPORTANCE OF GOOD GOVERNANCE IN A sets out requirements for the inclusion of ESG REGULATED INDUSTRY considerations in fund investment strategies. The inclusion The challenges that SuperFund, and the entire South of social, environmental and economic sustainability African retirement industry have had to navigate over the investments in a portfolio has the potential to significantly past year have not only been fiscal in nature. The steady enhance long-term returns. The performance of AGP increase in industry regulation has continued unabated. mentioned earlier, is an excellent example of this. While an increasingly regulated retirement funding industry inevitably creates more work for its participants, Ultimately, it is important to keep in mind that helping we fully support regulation. That is because we recognise retirement fund members achieve the best possible that effective regulation is in the best interests of all outcomes requires a holistic approach - one that embraces stakeholders, in particular retirement fund members and all aspects of good fund management, from governance participating employers. and investment resilience, to service excellence, tech- nological advancement, and an unwavering commitment Fortunately, as a Fund that has built its success on to innovation. an absolute commitment to governance excellence, SuperFund did not have to make any significant As is evident from the contents of this 2018/19 Annual adjustments to the way it operates, or is managed, and Report, Old Mutual SuperFund remains committed was largely already compliant with most of the regulations to harnessing and maximising all of these success and regulatory changes introduced over the past financial components to keep on delivering the results, confidence, year. This includes both the Default Regulations, and the and peace of mind that our members deserve, particularly Retirement Savings Cost disclosure standards, which have during times of economic uncertainty. significantly enhanced the transparency of the South African retirement industry as a whole. GRATITUDE Old Mutual Corporate went beyond expectations with I would like to express my immense gratitude to all our regard to these regulatory changes, and undertook Old Mutual SuperFund members, participating employers extensive awareness and education campaigns that and intermediaries for continuing to place their trust assisted all SuperFund stakeholders, particularly in our Fund. The confidence they have in SuperFund is a intermediaries and participating employers, to fully cornerstone on which its continued success is built. understand the regulations. Thank you, as well, to my fellow Management Board It is likely that we will see regulatory oversight intensifying members and our Principal Officer, Fiona Reynolds, for going forward. We welcome this regulation and the their hard work and commitment to the Fund. protection it affords all retirement sector stakeholders. That said, we believe that new or revised regulations must Lastly, I want to express my gratitude to Old Mutual be in the best interests of those stakeholders, which is Corporate as Fund sponsor, the Financial Sector Conduct why we make it a policy to engage with government and Authority, and to all our business partners, suppliers, and regulatory bodies, and provide our input and guidance investment managers. The Old Mutual SuperFund success wherever possible or required. story is the result of a concerted team effort, and they are all highly valued and appreciated members of that team. STAYING LEVEL-HEADED ABOUT PRESCRIBED ASSETS Bertie van Wyk A particular area of concern and extensive debate over Chairman the past year has been the issue of prescribed assets. Old Mutual SuperFund Management Board 14
OFFICER’S REVIEW CHAIRMAN/PRINCIPAL THE OLD MUTUAL SUPERFUND SUCCESS STORY IS THE RESULT OF A CONCERTED TEAM EFFORT, AND THEY ARE ALL HIGHLY VALUED AND APPRECIATED MEMBERS OF THAT TEAM. 15
MESSAGE FROM THE PRINCIPAL OFFICER It is an understatement to say that the past financial year has been a difficult one for retirement funds, their members and, indeed, all South Africans. Apart from the negative impact of poor investment market performance on most retirement funds, the sustained economic challenges are steadily adding to the socio-economic pressures felt by most people in our country. We are acutely aware of the challenges that most of our fund members face on a daily basis. We remain focused on doing everything we can to maintain the trust they continue to place in us as stewards of their vital retirement investments. We also recognise the added pressures placed on families due to the combination of family budgetary constraints and rising unemployment levels. Despite these challenges, however, the reason for our existence remains to help our members achieve the best possible retirement outcomes. Which is why we continually “THANK YOU TO ALL encourage our members to contribute as much as they can afford towards their funds, and more importantly, OUR MEMBERS FOR preserve their fund investments - even when they face the challenges of job losses or changes. THE FAITH AND TRUST We believe that, while the specific financial challenges THEY PUT IN OLD will likely pass in time, mistakes made with retirement MUTUAL SUPERFUND planning today could have a negative impact for the rest of a person’s life. BY AFFORDING US With this in mind, we remain committed to doing our THE PRIVILEGE OF part to ensure that our members keep progressing in their retirement journeys, and that they feel 100% confident BEING PART OF that, in SuperFund, they have a trusted and reliable partner. THEIR RETIREMENT ALWAYS STRIVING FOR GOVERNANCE EXCELLENCE JOURNEYS.” At Old Mutual SuperFund, we know that achieving the best possible outcomes for our members is only possible off a foundation of excellent governance. In addition to ensuring that the Fund is well placed to respond to an ever-changing external environment, our approach to good governance runs through every aspect of how the Fund is directed, managed, controlled and, ultimately, held to account. This governance commitment extends to every component of the Fund. It is especially evident in the structure, skills and values of the Management Board and the alignment of the strong ethics of its members with the King Codes on Corporate Governance. To this end, it is expected of every Board Member to embrace and exhibit the characteristics PRINCIPAL of Integrity, Competence, Responsibility, Accountability, Fairness and Transparency. OFFICER’S An audit by the FSCA in the 2018/19 financial year revealed this to be the case as it expressed its satisfaction with the REVIEW Fund’s governance practices. More details of the findings of this FSCA inspection will be communicated with stakeholders when the final report is received. 16
PRIORITISING SUPERIOR SERVICE BECOMING EVEN MORE MEMBER-FOCUSED While SuperFund has always prioritised service excellence, Old Mutual SuperFund’s success and growth over the years in recent years, our service model has evolved significantly. can be attributed, in large part, to a single aspect of our This has been a key requirement because, while accessibility, Fund. That is our absolute commitment to putting our turnaround times, and member satisfaction are all key members at the heart of every decision and action we take, service components, we have increasingly recognised whether that involves governance, investment, service, OFFICER’S REVIEW CHAIRMAN/PRINCIPAL the need to ensure that our members fully understand benefit design, or anything else involved in managing a their Fund benefits and are leveraging these to achieve leading retirement fund. the best possible long-term outcomes. We continually enhance the service we offer to ensure it is relevant and Our mission has always been to delight every one of our fully supports our members and their efforts to retire well. members by providing them with solutions that enable This focus on relevant, value-adding service also extends them to achieve the financial and investment outcomes beyond our members, and we work tirelessly to balance they want, and deserve. As is evident from the overview meeting member needs with satisfying the needs of our of the past year’s SuperFund activities contained in this participating employers and our intermediaries. Annual Report, we remain committed to delivering on this mission, irrespective of economic challenges, in a way that DELIVERING THROUGH DIGITAL empowers and equips our members and instils confidence A key component in this evolving service delivery model in them that they are partnered with a Fund that puts is embracing and harnessing the power of digital as a them first. way of maximising our efficiencies and our delivery to our stakeholders. Over the past year, we have continued to THANKS drive the digitisation of many aspects of our administration Thank you to the Old Mutual SuperFund Management offering, not only to enhance our service proposition, Board members for their support during my first full but also to ensure that SuperFund remains relevant, year as Principal Officer of the Fund. Their individual and competitive and highly appealing in a rapidly digitising collaborative commitment to their task is admirable and world. inspiring. That said, we remain mindful of the digital limitations Thank you, also, to the Fund sponsor, Old Mutual Corporate, still experienced by many of our members, as not all of and to the many partners and stakeholders, including the them have access to digital platforms. Our digital focus FSCA and the Office of the Pensions Fund Adjudicator who will therefore always be balanced with a recognition of work so closely with us to help us succeed in delivering on the need to continue offering members opportunities to our mandate to our members. engage with us, and receive service, via the platforms and channels they prefer. Lastly, thank you to our intermediaries and participating employers for their partnership and support, and to all our A further challenge to our digitisation journey is data. Given members for the faith and trust they put in Old Mutual that, for the most part, we do not “own” the relationship SuperFund by affording us the privilege of being part of with our members directly, it is very difficult to ensure their retirement journeys. we have the correct contact information to enable us to engage with them digitally. By way of example, we Fiona Reynolds currently have email addresses for approximately 30% of our members. Rectifying this situation is a key focus for the Principal Officer Fund in the coming year. We have plans in place to work Old Mutual SuperFund Management Board with our intermediaries and participating employers to significantly improve our member data, ensuring that as many of our members as possible can benefit from digital engagement and servicing. 17
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OLD MUTUAL SUPERFUND PROFILE SUPERFUND PROFILE OLD MUTUAL 3 OLD MUTUAL SUPERFUND ULTIMATELY EXISTS FOR THE BENEFIT OF ITS MEMBERS. WHILE THE FUND HAS RELATIONSHIPS WITH A BROAD RANGE OF STAKEHOLDERS, ITS DEALINGS WITH ALL OF THESE ARE UNDERPINNED BY A COMMITMENT TO LEVERAGING ITS STAKEHOLDER ENGAGEMENTS AND PARTNERSHIPS TO ENSURE CONSISTENT LEADERSHIP IN TERMS OF DELIVERING THE OUTCOMES ITS MEMBERS DESERVE. 19
KEY FUND DATA 4 KEY RETIREMENT FUND OPTIONS R112 BN 1 in assets under management OLD MUTUAL SUPERFUND EASY R3 BN R1 BN • Simple, cost effective packaged solution that’s ideal for in assets in in Deferred SuperFund Preserver Retirement option small to medium companies • Pre-selected investment options plus death, disability, 456 715 funeral and dread disease cover • Range of value-added member benefits and services at active members (pension and provident funds) no additional cost 32 349 Preserver Fund 5 787 participating 2 Members employers OLD MUTUAL SUPERFUND CHOICE • Flexible solution with extensive employer and member SUPERFUND IN SUMMARY choice • Cost effective Largest commercial umbrella fund in South Africa • Range of investment options, including: Offers a range of flexible retirement solutions plus - Trustee Choice - Default Absolute Stable Growth preservation and deferred retirement options Fund portfolio - Lifestage investment package - smoothed or market- Popular default investment - Old Mutual linked Lifestage investments Absolute Stable Growth Fund - Strategy investment package - Old Mutual and Seamless, trustee-endorsed at-retirement Nedgroup investment portfolios annuity options - Extended investment package - trustee-approved single and multi-managed portfolios CORE FUND OBJECTIVES 3 OLD MUTUAL SUPERFUND • Be the confident first choice for provision of CONNECT retirement fund services • Flexible solution that allows a bespoke investment • Consistently delight our members, participating structure to be crafted from the range of investment employers and intermediaries portfolios already offered by SuperFund. • Maintain a reputation for excellent governance, 4 good investment performance and proven value for money • Always add value through: OLD MUTUAL SUPERFUND - absolute member focus; CUSTOMISED - consistent service excellence; • Designed for large organisations and corporates - fit-for-purpose benefits; and • Fully customisable for hands-on involvement - responsible business and investment that delivers sustainable benefits • Choice of an Old Mutual integrated risk benefits or customised solution from external providers 20
PRESERVATION AND DEFERRED RETIREMENT SUPERFUND PRESERVER DEFERRED RETIREMENT • In-fund preservation solution • For retiring members who don’t need to access their fund benefit yet • Protects members’ retirement savings when they change jobs or leave employer • Seamless retention of benefit in SuperFund • Seamless retention of fund benefit with same • Continued growth and service investment choices • Easy access to fund benefit when needed • Competitive costs SUPERFUND PROFILE OLD MUTUAL TREATING MEMBERS AND EMPLOYERS FAIRLY • Committed to putting members at the centre of everything we do • Fully supports TCF principles and outcomes • Rigorous TCF governance process including ongoing self-assessment • Aligns with TCF outcomes as follows: CULTURE AND GOVERNANCE - PRODUCT AND SERVICE DESIGN - exist to serve our members specifically designed to meet needs of members DISCLOSURE AND INFORMATION - SUITABLE ADVICE - full communications strategy with clear supported by experienced financial advisers and simple information PERFORMANCE AND SERVICE DELIVERY - AFTER SALES TREATMENT - committed to meeting needs and expectations passionate about service and of clients and members customer satisfaction SOLUTIONS AT RETIREMENT For detailed information about Old * Provides members with two at-retirement annuity Mutual SuperFund and the investment offerings options and risk benefits it offers, please visit https://www.oldmutual. • Trustee-approved life and living annuity co.za/corporate/products-and- • Seamless and affordable services/employee-benefits/old- mutual-superfund • Supported with pre- and at-retirement guidance 21
OLD MUTUAL SUPERFUND’S STAKEHOLDERS Old Mutual SuperFund ultimately exists for the benefit of its members. While the Fund has relationships with a broad range of stakeholders, its dealings with all of these are underpinned by a commitment to leveraging its stakeholder engagements and partnerships to ensure consistent leadership in terms of delivering the outcomes its members deserve. Below is a breakdown of the key stakeholders and the role they play in leading members towards those optimum retirement outcomes: WHO ARE THEY? WHY WE ENGAGE WITH THEM MAIN ENGAGEMENTS AND RESPONSES IN 2018/19 FUND MEMBERS • 456 715 employees of • To help them achieve their retirement The Board has always taken Treat participating employers objectives Customers Fairly (TCF) principles into • Each one considered a • To support them in transforming their account in their decisions and actions stakeholder in the Fund futures through positive financial with regard to the Fund. In the year in outcomes review, they approved a formal TCF Policy. • Very diverse, but share the same vision - a comfortable, secure retirement PARTICIPATING EMPLOYERS • 5 787 participating • To partner with them to ensure they The Board hosts an annual Old Mutual employers representing enable their employees to achieve good SuperFund Summit in all the main businesses of all types and retirement outcomes centers. This ensures all stakeholders, sizes • To understand their needs and offer an including participating employers, have • Each with its own unique appropriate range of benefits an opportunity to engage with the Fund needs and characteristics and get their queries resolved or make • To improve ease of doing business with their concerns known. us Quarterly newsletters are distributed to all • To provide information, support and participating employers. guidance • To help them provide the Fund with accurate and complete data and make timeous contribution payments • To partner with them to build a more economically stable South Africa INTERMEDIARIES • Critical business partners • To strengthen the relationship The annual Old Mutual SuperFund • Providers of professional • To improve ease of doing business with Summit, which is hosted by the Board services to members and the Fund in all the main centers of South Africa, employers is typically very well attended by all • To improve two-way communication stakeholders, including intermediaries. • To understand their needs and deliver Quarterly newsletters are distributed to all enhanced services and support intermediaries. • To help them build their businesses by being providers of premium retirement solutions OLD MUTUAL AS FUND SPONSOR • Old Mutual South Africa • To ensure continued independence of Old Mutual is represented at the annual • Relationship managed the Management Board Old Mutual SuperFund Summit hosted by through a comprehensive • To enable objective governance, focused the Board in all the main centres. Governance Agreement on the best interests of members Relevant representatives of Old Mutual as • To promote an effective partnership the Fund Sponsor, are on the mailing list for the quarterly Fund newsletters. • To immediately address issues or challenges and ensure effective Old Mutual also engages directly with collaboration employers, brokers and members on an ad hoc basis, and as requested. • To align the Fund’s transformation efforts with those of Old Mutual 22
OLD MUTUAL AS FUND ADMINISTRATOR • Old Mutual South Africa • To ensure appropriate accountability and Quarterly newsletters are distributed to all • Old Mutual Corporate service standards stakeholders, including the relevant Old • To maintain clearly defined roles and Mutual representatives. • Specific administration agreement in place responsibilities Old Mutual has the opportunity to that defines the • To assess the effectiveness of the partnership regularly engage directly with relevant administration services, and address any issues or challenges stakeholders, including employers, brokers deliveries and time and members. • To ensure mutual understanding of roles standards and responsibilities THE FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA) • Body that provides • To maintain clear lines of communication In preparation for the implementation of the regulatory oversight • To ensure the highest levels of compliance new Default Regulations, an in-Fund Annuity SUPERFUND PROFILE OLD MUTUAL to the retirement fund Strategy was developed and approved, a • To provide regulatory and policy input and industry Retirement Benefit Counsellor service was support, where relevant implemented and changes to the Fund Master Rules were made to allow in-Fund preservation on retirement and withdrawal. Detailed face-to-face discussions were held with the regulator regarding the proposed (and later implemented) Default Regulations as well as the holistic S13a process. Engagements were also held with the Pension Fund Adjudicator’s office to address the interpretation of some of the issues around payment of death benefits ( S37c). The FSCA visited SuperFund to conduct a full review, the results of which were very positive. ASSET MANAGEMENT COMPANIES • Investment managers • To build relationships with asset managers Fund Fact Sheets and performance reports selected for their • To ensure understanding of the outcomes are made available on the internet. commitment to desired by the Fund’s members Annually, the asset managers are part of consistent investment the Old Mutual SuperFund Summit that • To agree on performance expectations performance, takes place in all the main centres in sustainability and • To actively promote the transformation of South Africa. transformation asset managers Quarterly investment newsletters are • To conduct transformation and sustainability distributed, providing key investment assessments and support the transformation highlights. efforts of the managers where possible • To quickly address any issues that may present a risk to the relationship SUPPLIERS • Providers of products • To optimise the contribution of the Fund to Changes by the Regulator to the S14 and services to the the transformation of South Africa’s business process required proactive engagement Fund environment with the Transferor Funds to ensure all the • Businesses that • To give effect to the Fund’s preferential details needed for individual members demonstrate a similar procurement policy were obtained, and ensure seamless transformation transfer. • To maximise support of supplier businesses leadership A lot more engagement also takes place • To promote mutually beneficial business commitment with tracing service providers to assist with relationships obtaining details of individual members for • To provide support and assistance in death benefit payments. terms of their sustainability, responsible investment, employment equity and economic contribution to SA 23
CASE STUDY #1 RETIREMENT SAVINGS INSIGHTS Umbrella funds are a significant, and growing, part of South Africa’s retirement funding landscape. As the largest commercial umbrella fund, Old Mutual SuperFund has an extensive member base of over 450 000 members, employed in a diverse cross section of more than 5 700 businesses participating in the scheme. The fact that SuperFund membership is highly representative of the total umbrella fund membership across South Africa makes it an excellent research resource from which to extract information on retirement readiness and the retirement savings habits of typical South Africans who belong to a retirement fund via their employer’s scheme. To unpack these valuable insights, Old Mutual Corporate Consultants conducted an in-depth analysis of Old Mutual SuperFund member data, with particular reference to typical retirement age, fund type preferences, levels of contribution, and asset accumulation. The results are summarised below. NORMAL RETIREMENT AGE (NRA) 65 • Still many members in schemes with NRA of 60. This makes it very challenging for the majority to save enough for retirement, especially given longer life expectancies. of schemes • High number of members still working past NRA. PREFERRED FUND TYPE GRAPH 1: MEMBERSHIP PER SALARY BAND 2x 200 000 PENSION FUND 160 000 PROVIDENT FUND PROVIDENT FUND as many Provident Fund MEMBERS members as Pension Fund 120 000 members 80 000 Provident Fund mainly 40 000 preferred by lower income employees PENSION FUND 0 1 2 3 4 5 MEMBERS AVERAGE MONTHLY PENSIONABLE SALARY SALARY BAND PENSIONABLE SALARY PER MONTH R26 500 R13 900 1 < R10 000 2 R 10 000 - R 20 000 3 R 20 000 - R 50 000 4 R 50 000 - R 80 000 R20 170 R11 640 5 > R 80 000 PENSION FUND PROVIDENT FUND 24
CONTRIBUTIONS 11.4% of salary is the average contribution • • 2% of members contribute 20%+ of salary 3% of members contribute 5% or less towards retirement savings. (lower than 15% recommendation) • Very few members are taking advantage of tax breaks 10.4% 13.2% • for retirement contributions. However, 20% of members do make additional for provident fund for pension Fund members members voluntary contributions. RETIREMENT SAVINGS MEMBERS NEARING RETIREMENT Most members are accumulating savings slower 57% of members within 5 years of NRA have savings in the SUPERFUND PROFILE OLD MUTUAL than required. fund of less than 2x their annual salary** * Multiple of Annual Salary (MAS) levels for research sample Only 6% of members across both fund types, who are GRAPH 3: MULTIPLES OF ANNUAL SALARY BY AGE – within one year of NRA have a MAS of 9 or more. PENSION FUND PENSION FUND 4.0 MAS MALES FEMALES 3.5 Within Within 3.0 2.5 years 2.5 years 1 year of 1 year of from NRA from NRA 2.5 NRA NRA 2.0 =10 1% 5% 2% 4% 18 23 28 33 38 43 48 53 58 63 AGE PROVIDENT FUND GRAPH 4: MULTIPLES OF ANNUAL SALARY BY AGE – PROVIDENT FUND MAS MALES FEMALES 4.0 Within Within 2.5 years 2.5 years 1 year of 1 year of 3.5 from NRA from NRA NRA NRA 3.0 =10 2% 3% 2% 3% 0.5 0 **This ignores any other savings they may have outside of the fund. 18 23 28 33 38 43 48 53 58 63 AGE Recommended Multiple of Annual Salary (MAS) CONCLUSION at age 65 for a 70% replacement ratio is: The majority of employees, irrespective of their 9 9.7 10.5 income level, are experiencing challenges when it comes to saving enough in their employer offered for a single for a single for a couple retirement fund. That said, the fact that there male female are members of Old Mutual SuperFund who are succeeding in contributing enough to their fund to Results show that the majority of members can’t rely only ensure sufficient savings by retirement age illustrates on savings in their current employer’s fund to provide for that a financially secure retirement is achievable, their retirement. particularly if these members receive the support and *Note: These figures only reflect the savings of members in their education required from their fund and employers. current employer’s fund. 25
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PERFORMANCE METRICS TOTAL IN-SERVICE MEMBERS AS AT 30 JUNE 2019 500 000 400 000 300 000 200 000 100 000 0 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 OLD MUTUAL SUPERFUND PENSION FUND OLD MUTUAL SUPERFUND PROVIDENT FUND SUPERFUND PRESERVER MEMBERSHIP AS AT 30 JUNE 2019 THE YEAR IN REVIEW 4 30 JUNE 2014 1064 30 JUNE 2015 9558 30 JUNE 2016 15 073 30 JUNE 2017 21 143 30 JUNE 2018 27 599 30 JUNE 2019 32 349 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 THE YEAR IN REVIEW 27
PERFORMANCE METRICS FAIR VALUE OF FUND INVESTMENTS* AS AT 30 JUNE 2019 120,0 100,0 80,0 57,2 55,1 R BILLION 50,0 46,7 60,0 41,7 40,0 14,6 53,3 55,0 6,1 48,0 20,0 40,5 44,9 4,1 11,0 7,5 9,1 20,2 5,2 6,0 7,2 0 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 OLD MUTUAL SUPERFUND PENSION FUND OLD MUTUAL SUPERFUND PROVIDENT FUND *The Fair Value of Fund Investments is the Total Assets less accruals and bank account balances. CONTRIBUTIONS AS AT 30 JUNE 2019 12,0 10,0 8,0 6,7 5,9 R BILLION 5,5 5,1 6,0 4,4 4,0 2,4 4,8 5,1 4,1 4,5 2,0 1,8 3,5 1,5 1,6 1,2 1,5 0,6 0,7 0,8 1,0 0 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 OLD MUTUAL SUPERFUND PENSION FUND OLD MUTUAL SUPERFUND PROVIDENT FUND ADMINISTRATION FEES AS A % OF ASSETS 1,60% 1,40% 1,20% 1,00% 0,80% 0,60% 0,40% 0,20% 0,00% 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 28
THE YEAR IN REVIEW ANNUAL REVIEW OF INVESTMENTS The Old Mutual SuperFund Management Board embraces The portfolio and manager recommendations made by its responsibility to ensure that the structures, asset OMCC are informed by their ongoing assessment of the allocations and performance of investment portfolios following criteria: within each of the investment options or packages • historic risk-adjusted investment performance against provided meet the needs and risk/return requirements of benchmarks and peers over a range of time periods; members. • qualitative characteristics of the investment managers; The Management Board also ensures that the overall • transformation concerning Broad-Based Black investment strategy of the Fund, as set out in the Investment Economic Empowerment; Policy Statement (IPS), is suited to the diverse needs of all its members. • responsible investing; • Regulation 28 compliance; Old Mutual Corporate Consultants (OMCC) is the professional investment consultant business appointed • investment management fee competitiveness; and by the Management Board to provide professional, • general compliance with the requirements of the independent advice regarding the investment strategy. Fund’s Investment Policy Statement. OMCC reports to the Board on the performance, compliance, and benchmarks of the Fund’s underlying For a detailed overview of Old Mutual SuperFund’s holistic investment portfolios. It also monitors the performance of approach to investment performance monitoring and the investment professionals tasked with managing these assessment, please see page 32 of this report. investment portfolios and makes recommendations to the Board regarding the retention or replacement of managers according to their ongoing performance and alignment with the investment strategy. 29
KEY PERFORMANCE REVIEW FINDINGS AND RECOMMENDATIONS ASSESSMENT OF DEFAULT INVESTMENT PORTFOLIO The Old Mutual Absolute Stable Growth Portfolio (AGP Stable) is the Trustee Choice default investment utilised extensively within SuperFund. This portfolio is considered in detail in the annual performance review, and in this Annual Report. AGP Stable offers a guarantee level of 80% and targets an inflation benchmark of CPI + 5.5%. In the year in review, the investment solution delivered on its goals of providing long-term inflation-beating returns with consistent downside protection. OMCC expressed its continued satisfaction that AGP Stable is appropriate for the long-term needs of the Fund and is well suited as a default investment. Overall performance of the Absolute Smooth, Absolute Stable and Absolute Secure Growth Portfolios relative to smoothed bonus peers in the market remains satisfactory over the various periods. Performance relative to peers over the most recent two years, is also well positioned. Aspects of the performance of the Absolute Stable Growth Portfolio over the year in review that are worth noting are as following: • The underlying performance of the AGP assets against their respective benchmarks has improved from last year, with only marginal underperformance of certain asset classes compared to their benchmarks, and pleasing outperformance of selected asset classes. • While the fact that the portfolio has a weighting towards growth assets means that it is likely to underperform other, more conservative offerings during challenging market times, the Board is confident that the higher allocation towards growth assets is most likely to provide returns in excess of inflation over the long term. • Any short-term comparison of declared bonuses against other smoothed bonus investments must take into account the distorting impact of smoothing and the relative level of each investment fund’s bonus smoothing reserve. • Capital protection is valuable for any default investment fund because of the high turnover of membership, the low level of understanding of investment matters, and the limited use of appropriate financial planning. CHANGES TO THE INVESTMENT OFFERINGS Some of the investment package options within Old Mutual SuperFund offer levels of investment choices for members. The Old Mutual SuperFund Management Board has a responsibility to ensure that the available investment portfolios, within each of these investment packages, consistently meet the diverse investment needs of members. Based on this responsibility, and the recommendations of OMCC as the Fund’s investment consultant, the Board is introducing the following changes to the Funds investment options with effect from 1 October 2019. INVESTMENT PORTFOLIOS CLOSED FROM REPLACEMENT INVESTMENT PORTFOLIOS 1 OCTOBER 2019 Alexander Forbes Investments 37.5% Equity Old Mutual Multi-Managers Inflation Plus 1-3% Strategy Old Mutual Investment Group Profile Balanced Old Mutual Investment Group Profile Edge28 Old Mutual Absolute Secure Growth Old Mutual Coregrowth 100 Oasis Crescent Balanced Progressive Fund of Funds Old Mutual Albaraka Balanced Fund Old Mutual Nucleus Balanced Old Mutual Multi-Managers Balanced Tracker Old Mutual Nucleus Moderate Old Mutual Multi-Managers Moderate Tracker Old Mutual Nucleus Conservative Old Mutual Multi-Managers Conservative Tracker Members were given until 23 September 2019 to select alternative investment portfolios from the full range of Old Mutual SuperFund Choice portfolios. Those members who did not provide Old Mutual SuperFund with alternative selection had the affected portion of their retirement savings automatically switched to a similar portfolio, as indicated in the table above. These replacement portfolios were selected by the Old Mutual SuperFund Management Board based on their risk profiles and manager styles. 30
NEW PORTFOLIOS ADDED TO OLD MUTUAL SUPERFUND Two Shari’ah compliant portfolios have been added, to provide additional diversification within the Higher Reward/Risk Market Linked category. These are: • Kagiso Islamic Balanced Fund; and • OMIG Shari’ah Composite Fund. In addition, the Vunani Global Absolute Inflation Plus 7% portfolio will be added within the Higher Reward/Risk Absolute Return category. This portfolio has an aggressive investment approach with a primary objective to deliver a return of at least CPI plus 7% per annum over a rolling three-year period, and a return of at least CPI over a rolling 12-month period. MERGING AND RENAMING OF OMMM PORTFOLIOS The Old Mutual Multi-Manager Absolute product offering were consolidated with effect from 1 October 2019. The changes are summarised in the table below: CURRENT PORTFOLIO CHANGES TO BE IMPLEMENTED OMMM Absolute This portfolio has been merged into the OMMM Managed Fund. Balanced Fund OMMM Absolute This portfolio changed its name to the OMMM Defensive Balanced Fund. The dual objectives Defensive Fund of the investment portfolio (to protect capital over rolling 12-month periods, and to target returns of CPI plus 4% over the long-term) have not changed. The Old Mutual SuperFund Management Board is satisfied that the performance of the portfolios offered to the Fund’s members have been reasonable over the year in review. The Fund continues to deliver quality investment portfolios to its THE YEAR IN REVIEW members, which are highly competitive in the South African retirement funding market. 31
CASE STUDY #2 A HOLISTIC INVESTMENT DETERMINING THE QUANTITATIVE SCORE ASSESSMENT PROCESS To reach an overall quantitative score for each investment Giving members maximum peace of mind manager and/or portfolio, the following four historical performance aspects are considered: Old Mutual SuperFund is committed to constantly and comprehensively monitoring the performance • average ranking during historical bull periods; of the investment portfolios underlying its diverse • average ranking during historical trendless periods; member investment options. • average ranking during historical bear periods; and Given that historical performance of an investment • average ranking over the most recent two years. portfolio should never be considered a guarantee of future performance, SuperFund’s investment These rankings are weighted according to SuperFund’s assessment involves careful consideration and expectation of future market trends and the final analysis of an extensive range of key factors, all of quantitative score is based on 70% of the historical average which are combined to produce a “score” for each rankings and 30% of the average ranking over the most of the portfolio managers for the year in review. recent two years. RE FUND WEIGHTINGS OF THE FOUR KEY ASSESSMENT FACTORS The following weightings are applied when determining the overall score for each investment manager: 45% 35% QUALITATIVE QUANTITATIVE 15% 5% TRANSFORMATION RESPONSIBLE INVESTMENT 32
DETERMINING THE QUALITATIVE SCORE ASSESSMENT OVERLAYS Qualitative analysis of investments and managers is Once the quantitative and qualitative scores have been applied to criteria that are difficult to quantify, and which calculated, the investment managers are assessed in terms are often relatively subjective. By attributing scores to each of the evidence they can offer concerning their commitment of these criteria, based on specific assessment factors, that to transformation and responsible investment. subjectivity is limited or even removed from the analysis. The following key qualitative factors are assessed: • Transformation - This considers the Broad-Based Black Economic Empowerment commitment and actions of the investment manager. Scores are derived from Time spent The time that the investment team applicable B-BBEE scorecards in terms of the Amended together has been together, looking after the Financial Sector Code. specific investment portfolio and whether the core team has remained • Responsible Investment - This assessment factor aligns largely unchanged with SuperFund’s Investment Policy Statement, and investigates the ways in which managers consider all Approach and The investment manager’s approach factors that may materially affect the sustainable long- philosophy to portfolio construction, including term performance of their assets. overall asset allocation and stock picking philosophy, and whether they employ a bottom up or top down THE ASSESSMENT AND REVIEW PROCESS approach at a macro level The diagram below outlines the assessment and review Ownership A manager will score highly if there THE YEAR IN REVIEW process of the investment managers and portfolios and incentive is a clear and transparent structure available as investment choice options for SuperFund structures in place that is best aligned with the members: long-term objectives of the portfolios they manage PORTFOLIO UNIVERSE Decision Level of collaboration of investment making ideas and views between all members of the investment team INSTITUTIONAL PORTFOLIO UNIVERSE Research The extent of the firm’s research Classify Institutional Portfolios into Peer Groups capabilities capabilities and how this integrates into the portfolio manager’s decisions Responsible Quantitative Transformation Investment Organisational Measure of how well the Score Score Score structures organisational structure promotes investment management as core business and allows for proper Qualitative Score Viability Factor succession planning and skills transfer Size Assets under management, BEST PORTFOLIOS percentage of the total portfolio made up by major investors and the Check against IPS Criteria overall capacity of the portfolio Administration Measure of effectiveness of systems administrative functions and whether RECOMMENDATIONS FOR there are sufficient and appropriate OM SUPERFUND controls in place Based on the assessments of current and potential Key man risk Whether high-calibre successors are investment managers, and the recommendations of Old in place or being developed for all key Mutual Corporate Consultants, the Management Board positions makes decisions on where to take action, how to revise and enhance the investment strategy, which portfolios to The final qualitative score, out of 10, for each investment remove or add, and how best to engage with investment manager is a weighted average of their scores on each of managers or participating employer management these assessment factors. committees. All of which ensures the highest likelihood that Old Mutual SuperFund members will enjoy the The qualitative score is converted to a score out of 10. competitive, sustainable investment returns they need. 33
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